6. INCOME TAXES

Income tax provision (benefit) consisted of:

	Years Ended

(in thousands)	December 29, 2013			December 30, 2012			December 25, 2011
Current:
Federal	$	17,728		$	4,701		$	28,913
State		5,302			(16,535	)		(1,553	)
Deferred:
Federal		(7,612	)		(4,701	)		(3,316	)
State		(2,162	)		(4,847	)		(15,648	)


Income tax provision (benefit)	$	13,256		$	(21,382	)	$	8,396

The effective tax rate expense (benefit) and the statutory federal income tax rate are reconciled as follows:

	Years Ended

(in thousands)	December 29, 2013			December 30, 2012			December 25, 2011
Statutory rate		35.0	%		(35.0	)%		35.0	%
State taxes, net of federal benefit		11.4			7.7			0.3
Changes in estimates		(0.0	)		0.2			0.6
Changes in unrecognized tax benefits		(5.2	)		(56.3	)		(13.6	)
Settlements		(1.3	)		(32.6	)		(10.4	)
Other		2.7			4.0			1.5
Stock compensation		(1.2	)		12.7			—


Effective tax rate		41.4	%		(99.3	)%		13.4	%

The components of deferred tax assets and liabilities consisted of the following:

(in thousands)	December 29, 2013			December 30, 2012

Deferred tax assets:
Compensation benefits	$	187,516		$	308,392
State taxes		3,625			4,984
State loss carryovers		5,007			5,815
Other		4,727			5,280


Total deferred tax assets		200,875			324,471
Valuation allowance		(3,741	)		(4,110	)


Net deferred tax assets		197,134			320,361
Deferred tax liabilities:
Depreciation and amortization		213,159			233,214
Investments in unconsolidated subsidiaries		71,840			64,317
Debt discount		12,434			15,059
Deferred gain on debt		33,007			33,084


Total deferred tax liabilities		330,440			345,674


Net deferred tax liabilities	$	133,306		$	25,313

The valuation allowance relates to state net operating loss and capital loss carryovers. It decreased by $0.4 million in fiscal year 2013 and decreased by $5.4 million during fiscal year 2012.

As of December 29, 2013, we have varying amounts of net operating loss totaling approximately $181.6 million and capital loss carryovers totaling approximately $13.5 million in several states. The net operating losses expire in various years between fiscal years 2020 and 2033 if not used. The capital loss carryovers will expire in fiscal years 2015 and 2018, if not used prior to that time. We have approximately $1.6 million of state tax credit carryovers which do not expire.

As of December 29, 2013, we had approximately $15.6 million of long-term liabilities relating to uncertain tax positions consisting of approximately $12.9 million in gross unrecognized tax benefits (primarily state tax positions before the offsetting effect of federal income tax) and $2.7 million in gross accrued interest and penalties. If recognized, substantially all of the net unrecognized tax benefits would impact the effective tax rate. It is reasonably possible that a reduction of up to $1.8 million of unrecognized tax benefits and related interest may occur within the next 12 months as a result of the closure of certain audits and the expiration of statutes of limitations. Net accrued interest and penalties at December 29, 2013, December 30, 2012, and December 25, 2011, were approximately $2.0 million, $2.5 million and $15.5 million, respectively.

A reconciliation of the beginning and ending amount of unrecognized tax benefits consists of the following:

	Years Ended

(in thousands)	December 29, 2013			December 30, 2012			December 25, 2011
Balance at beginning of fiscal year	$	8,649		$	30,463		$	51,992
Increases based on tax positions in prior year		7,631			—			1,409
Decreases based on tax positions in prior year		(935	)		(9,933	)		(13,475	)
Increases based on tax positions in current year		1,386			745			2,213
Settlements		(259	)		(643	)		—
Lapse of statute of limitations		(3,583	)		(11,983	)		(11,676	)


Balance at end of fiscal year	$	12,889		$	8,649		$	30,463

As of December 29, 2013, the following tax years and related taxing jurisdictions were open:

Taxing Jurisdiction	Open Tax Year	Years Under Exam

Federal	2010-2013
Washington, D.C.	2006, 2010-2013	2006
Illinois	2008-2013	2008-2009
California	2009-2013	2009-2010
Other States	2006-2013